Despite a rally in the equity markets, February proved to be a lackluster month for Raymond James Financial.

Securities commission and fee revenues declined 9.2% from January, which had two more business days, the company reported, falling to $243 million from $268 million.

Fixed income trading profits “remain depressed and commission volume is down from the preceding month, both tracking well below recent historic averages,” according to a Raymond James statement accompanying the release of its February operating data. Fixed income “is currently underperforming our expectations,” the company said. “As we have previously reported, we are continuing to evaluate and adjust our cost structure to improve margins in the future.”

Capital markets results at Raymond James have also been disappointing.

Although equity underwriting activity has been “reasonably good," the company reported, “merger and acquisition fees have been lackluster so far this quarter due in part due to the past acceleration of transactions into the December quarter in anticipation of tax law changes.”

BRIGHT SPOT IN AUM

Aided by the rising equity markets and net inflows, assets under management was a bright spot for Raymond James, rising to $49.5 billion last month from $38.5 billion in February 2012 and from $48.9 billion in January.

The Private Client Group made “modest progress” in February, and the company’s domestic operations are now all on one platform following a successful conversion of the Morgan Keegan accounts to the Raymond James system in mid-February.

LAYOFFS AHEAD?

The company also hinted at upcoming layoffs. “Our next priority is to adjust to the appropriate support levels for this segment, which will engender expense reduction primarily through a decline in headcount over the next several months,” the company said.

“We are pleased with our competitive position and the success of the Morgan Keegan integration to date,” Raymond James chief executive Paul Reilly said in a statement. “We now need to complete the remaining task to right size our cost structure post integration. We anticipate that most of this work will be completed by the end of the June quarter with the balance completed by the end of this fiscal year. Fundamentally, we are focused now on expense reduction to improve margins, as well as growth drivers for our various businesses.”

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